There are a lot of names for describing the Ground delivery services from UPS and FedEx that (sometimes) rely on the USPS to make the final delivery. Regardless of what name you know UPS SurePost or FedEx Ground Delivery by, there are two things to be sure of right now.
- The cost savings offered by such solutions make one or both an essential option for most ecommerce sellers with a high volume of residential deliveries.
- The costs for both services are increasing significantly in 2023.
UPS SurePost and FedEx Ground Economy (and the many other postal-hybrid parcel delivery carriers available to residential shippers) have grown in importance along with the growth of ecommerce. Last mile delivery to residences is difficult and expensive, and the post office can often provide the best-cost solution. That said, FedEx brought this function in-house and is no longer relying on the USPS. Another important point of contrast to other services from the carriers is that neither has a service guarantee (nor ever did).
Costs Are Going Up for Most Companies
It’s important to know that, just as with FedEx and UPS’s other services, both carriers have issued a GRI (general rate increase) for these ground economy types of services that will increase their cost in 2023.
Here we’ll break down which increases to ground economy services are noteworthy for companies using either carrier. It’s relevant to point out that each carrier’s specific services under these names are not the same, so an apples-to-apples comparison is harder than with most traditional services.
Overall the rate increases announced by the two carriers are similarly high, yet the increases related to Accessorials are dramatically different. For example, UPS SurePost is adding new penalties for “ugly boxes,” while FedEx maintains the same Delivery and Returns surcharge rates as in 2022.
Here are more details on how rates are going up in 2023.
UPS SurePost and FedEx Ground Economy Increase by Year
In 2023, the rate increases from FedEx and UPS become more punitive as weights increase. Generally, these services are optimized for packages under 11 lbs., since their genesis was an approach that relied on the USPS as well as the two carriers’ own operating networks. The following illustrations detail the UPS and FedEx increases for packages under 13 lbs. over the past three years.
UPS Surepost and FedEx Ground Economy Increase in Zone Types by Weight
The following illustrations detail the UPS and FedEx rate increases by zone group: long and short. Both demonstrate the exact pattern we saw in the UPS and FedEx Ground product GRIs (i.e., shorter zones are increasing less than longer-distance shipments). Of note is that in 2023 FedEx is increasing some weights by greater than 8%, while none of UPS’s increases will exceed 8% at any weight.
UPS SurePost
FedEx Ground Economy
UPS SurePost and FedEx Ground Economy Accessorial Increase Summary
In addition to rate and anticipated Delivery Area Surcharge (DAS) increases, UPS SurePost shippers need to take note of the tariff changes going into effect on March 26, 2023. UPS is changing the qualifications for its Non-Machinable Charge and adding three new SurePost surcharges for packages that have what the carrier considers excessive weight and dimensions.
There are details within this announcement that are important to understand for SurePost customers. Until these new charges go into effect in March 2023, Non-Machinable Surcharge is the only additional cost exposure on packages that weigh over 35lbs., have one dimension measuring more than 34 inches, or have any two dimensions measuring more than 17 inches (but not exceeding 30 inches). After March 26, UPS lowers the qualification for Non-Machinable Surcharge to packages having one dimension measuring more than 27 inches (but not exceeding 30 inches).
If that wasn’t enough, UPS has added a new Non-Standard Length Surcharge for packages having any dimension measuring more than 22 inches and not exceeding 27 inches. This means the bulkiest SurePost packages will see the biggest increases. Any package measuring more than 2 cubic feet will now be designated with a Non-Standard Cube Surcharge at $15 each. And shipments with one side measuring more than 30 inches and not exceeding 48 inches will be deemed Non-Standard Extra Length at a cost of $5 per package.
The most important takeaway from the UPS SurePost announcement is that with the lowering of dimensional qualifiers, more SurePost packages in 2023 will be subject to additional surcharges compared to 2022.
An interesting takeaway from FedEx’s announcement is that there is no change to the DAS, which is extra noteworthy considering FedEx provides coverage to the entire U.S. while UPS services the contiguous 48 states.
FedEx Ground Economy
UPS SurePost
UPS SurePost New Surcharges
How to Take Advantage of These Services
FedEx Ground Economy and UPS SurePost can offer great opportunities for companies shipping large volumes of residential packages — even with the increases coming in 2023.
A lot is changing with FedEx and UPS as we head into next year, and TransImpact can help you maximize the great chance you have to save money and improve delivery performance on all your packages. For a no-obligation analysis of your small parcel spend and tips for reducing your shipping costs, contact info@transimpact.com.